Oncor GC: 'There is only one deal on the table'

© 2017 The Texas Lawbook.

By Jon Prior of the Dallas Business Journal
(Aug. 7) – Oncor General Counsel Allen Nye will become the utility’s CEO. In an exclusive interview, Nye discusses negotiations with Warren Buffett, the Energy Future Holdings bankruptcy and how the Texas Public Utility Commission will view the proposed deal with Berkshire Hathaway.

Nye is a former partner at Vinson & Elkins. He received a law degree from St. Mary’s University School of Law and a bachelor’s in economics from Texas A&M University.
DBJ: When did you first meet with Berkshire about this deal? What was the meeting like?
Nye: Before we begin, let me make it clear that while the Energy Future Holdings (EFH) bankruptcy proceedings have received quite a bit of media attention, I want Oncor customers to know that our focus has never wavered. We remain committed to delivering safe, reliable affordable electric service to help power our state’s economy.
To your question, Oncor had discussions with Berkshire Hathaway Energy after NextEra Energy’s change-in-control application was denied by the Public Utility Commission of Texas. Berkshire Hathaway Energy (BHE) was very clear with us that they wanted to wait until the Commission made their decision – one way or the other – because they didn’t want to be seen as interfering in the deal.
Included in those discussions were BHE Chairman, President and CEO Greg Abel, and several members of his leadership team.
DBJ: From your sense, how eager are the Texas regulators to see something with Oncor get done as this has dragged on?
Nye: I believe the Commission has made it pretty clear that they ultimately want the best deal for Oncor customers, and they are willing to wait until that deal is presented. Of course, the Commission – like everyone else – would like to see a swift conclusion to Energy Future Holdings’ Chapter 11 proceedings that began in April 2014, but I think they have also made it clear they won’t compromise the public interest for a speedy resolution.
DBJ: Will a rate-paying Oncor customer feel a difference whether Buffett or Elliott wins out?
Nye: We have known Elliot Capital for years now, and we think they are good folks. It’s our understanding they are currently in the process of trying to put together financing for a potential bid for Oncor. If they are successful in raising capital, we will take a look at their proposal when it’s brought to us by our indirect majority owner, EFH.
Until then, it’s important to remember that there is only one deal on the table – from BHE – and we believe it is by far the best deal we have seen so far. BHE differentiated itself by engaging parties in Austin from the very beginning, working tirelessly to craft a proposal that would work for all parties involved, and clearly demonstrating their commitment to Oncor customers.
For example, BHE expressed support for an enhanced Oncor ring-fence by committing to an independent board of directors, consisting of a majority of disinterested directors; committing to a dividend-stopper that would halt cash flows up to the parent company if Oncor’s bond rating ever fell below BBB (Baa2); and by committing to pay off the debt sitting on top of Oncor.
Those are simply a few examples of the dozens of regulatory commitments made by BHE and signed onto by 11 influential stakeholder organizations (Including the Cities Served by Oncor, Texas Industrial Energy Customers, Office of Public Utility Council, and the Public Utility Commission of Texas Staff).
DBJ: While both Berkshire and Elliott are planning to keep ring-fencing in place, would Oncor still be susceptible to pressure if owned by a single company like Berkshire? How important is it to maintain a multiple-ownership structure as a check on that influence?
Nye: Specific ring-fencing measures required to close a successful Oncor transaction will be determined by the Public Utility Commission of Texas. However, we firmly believe that Oncor is a great fit for BHE, that they are committed to delivering their customers safe, reliable, affordable electric service, and that they would be a terrific partner for Texas.

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